Prices of coffee futures on ICE exchange are rising today more than 2%, as traders weigh in rising demand, higher shipping costs and colder weather in Brazil, the biggest coffee-producing country in the world (1/3 of global supply).
- Prices of both arabica (usually for blended coffee) and robusta beans (instant coffee usage) surged in recent months, on both NYC and London futures exchanges. Weather disrupting crops, with rising global coffee demand, are major drivers of actual bull run.
- Looking at the cocoa (but also coffee) volatility and somehow correlated 'hot markets' during recent months, we can assume that some institutional speculators may increase speculative actions on commodities, as a part of global 'carry trade'.
- According to ChAI, a commodity forecasting firm, coffee prices may still have some fuel for further growth from current levels, as speculators expect the bull run to continue. What's more, BMI commodities firm signals that due to higher lower quality robusta usage in coffee beans since 2021 to 2023, global inventories are low, supporting rising prices.
Of course, as for now coffee market is not so tight as cocoa, also volatility is lower, but if current, hard conditions will not change, we may potentially higher speculative interest, supporting riskier market behaviour. Cold weather in Brazil still give bulls a significant support. However, some weather forecasts signals rising chances for temperatures stabilising above 20 Celsius degrees, this week, so coffee volatility may persist - in both sides.
COFFEE (M30 interval)
Source: xStation5
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